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Puttin’ Off the Ritz: The New Austerity in Publishing

For decades the New York publishing world promised a romantic life of fancy lunches, sparkling parties, sophisticated banter and trips to spots like the Caribbean to pitch books to sales representatives. If the salaries were not exactly Wall Street caliber, well, they came with a milieu that mixed cultural swagger with pure Manhattan high life.

But that cushy schmooze fest seems to be winding down.

Just two weeks before announcing staff cuts and a substantial corporate restructuring in December, the publishing giant Macmillan gathered its sales and marketing staff at the historic Hotel del Coronado in San Diego — where Billy Wilder filmed Tony Curtis wooing Marilyn Monroe in “Some Like It Hot” — to talk about titles on the spring lists. Between marathon meetings to discuss plans for new books, the sales reps were invited to take part in wine tastings and spa treatments.

This year the meetings will be held via Webcam. In a memo to staff members announcing the layoffs on Dec. 15, John Sargent, chief executive of Macmillan, said the company would hold only one of its three annual sales conferences in person, and the other two would be conducted on the Web and by telephone.

Amid a relentless string of layoffs and pay-freeze announcements, book publishers are clamping down on some of the business’s most glittery and cozy traditions. Austerity measures are rippling throughout the industry as it confronts the worst retailing landscape in memory.

“This business was never meant to sustain limousines,” said Amanda Urban, a literary agent who represents Cormac McCarthy and Toni Morrison, among other authors. Ms. Urban said she believed Bennett Cerf, a founder of Random House, once said something to that very effect. “At best, you can get a Town Car now and then,” she said. “It’s gotten out of scale, like a lot of businesses in this country.”

Venerable houses including HarperCollins, Houghton Mifflin Harcourt, Penguin Group, Random House and Simon & Schuster have all announced salary freezes or layoffs, or both. Simon & Schuster canceled its annual holiday party, held for the last few years at Tavern on the Green and scheduled in 2008 for Guastavino’s, a splashy banquet hall in Manhattan. One division of Random House had pizza, beer and wine in a room off the cafeteria for its holiday lunch instead of going out for pricey cocktails. Across the city, editors with Four Seasons taste are being asked to scale back on their lunch tabs.

Random House has postponed its spring sales conference and has yet to choose a location. Stuart Applebaum, a spokesman, said one thing was certain: After holding a meeting in Bermuda last year the company “will not be returning there in 2009.”

Book sales have deteriorated since the beginning of October, falling about 7 percent compared with the same period the previous year, according to Nielsen BookScan, which tracks about 70 percent of sales. That slide is driving much of the immediate cutbacks, but the publishing industry is also being convulsed by longer-term trends, including a shift toward digital reading and competition from an array of entertainment options like video games and online social networking.

Ms. Urban said some of the more lavish practices could not be sustained by a slow-growth, low-margin industry that can’t charge luxury prices. “Books can only support a certain retail price,” she said. “It’s not like you have books that can be Manolo Blahniks and books that can be Cole Haan. Books are books. A book by James Patterson costs the same as a book by some poet.”

But the economic downturn is forcing publishers to scrutinize some of the industry’s hoariest traditions. One ripe target: the international book fairs in London and Frankfurt at which publishers and agents gather, ostensibly to make deals. But in reality they spend much of their time making the rounds of parties and dinners.

Many houses that previously have spent hundreds of thousands of dollars on flights, hotel bills and cocktail hours are planning to prune the size of the contingents they send to the fairs this year. Similarly, companies are revising their budgets for BookExpo America, the annual spring jamboree at which publishers promote their fall lineups to booksellers.

Photo

The London Book Fair in 2008. The London and Frankfurt fairs are ostensibly for deal-making, but also involve rounds of parties and dinners.Credit
Suzanne Plunkett/Bloomberg News

For authors it means the prospect of smaller advances and fewer books being acquired.

“Through these economic crunches that we’re all facing, some of the shibboleths of the business are being looked at with a very hard eye,” said Jonathan Burnham, publisher of Harper, an imprint of HarperCollins whose authors include Ann Patchett, Barbara Kingsolver and Michael Crichton.

Nobody expects one of the staples of the business — the long lunch — to die off completely because of these straitened circumstances. But publishers, editors and literary agents, who have often been among the best diners in the city, are now reconsidering their favorite restaurants.

“We’ve all naturally been thinking about whether it’s absolutely essential to have a lunch here or there,” Mr. Burnham added, “or whether it can be a phone call or a meeting.”

Industry veterans said bloated expense accounts were the least of publishing’s problems. “I don’t think the dire situation of the publishing world is going to be solved by tightening that particular belt,” said Robert Gottlieb, the renowned editor who has shepherded authors like Doris Lessing, Robert Caro and Joseph Heller. Mr. Gottlieb, who worked at Simon & Schuster and Alfred A. Knopf, was famous for always eating lunch at his desk. “It’s small potatoes compared to the problems they face,” he said.

It is not just publishing’s flashy customs that are getting a tough look. Other sacred cows, like the distribution of advance print galleys of coming titles and the costly practice of permitting retailers to return unsold books, are being examined.

Cash advances for authors, which have risen in recent years, are being reviewed.

“Everybody is trying to look at acquisitions in the prism of a reduced and a hurting retail market,” said David Rosenthal, publisher of Simon & Schuster. “You used to buy some books and you paid X because you figured it would sell 100,000 copies. Now you have to do the math saying this book may sell only 50,000 copies.”

At HarperCollins a new unit is experimenting with a model that substitutes profit sharing with authors for cash advances and eliminates returns of unsold copies from booksellers.

“The two biggest sucking sounds on profits in our business are on advances and returns,” said Robert S. Miller, president and publisher of the new HarperStudio, which was set up last year. The group is limiting advances to no more than $100,000 in exchange for giving authors half of the profits from book sales, as opposed to the 10 percent to 15 percent of the hardcover price they traditionally earn in royalties. Borders Group recently agreed to take the first 14 books on the new unit’s 2009 list on a nonreturnable basis.

Some publishers said that they would like to reduce the costs of returned books — which have to be shipped and then pulped or sold at deep discounts — but that it might be unrealistic to abolish the practice in tough economic times.

Jonathan Galassi, publisher of the literary powerhouse Farrar, Straus & Giroux, said the custom of accepting returns from booksellers was created during the Great Depression to persuade bookstores to take more copies. “In a moment where getting people to put stock in a store of anything, not just books, is harder because of the money it costs to front them,” Mr. Galassi said. “I think it might be counterproductive to have a return-free business at this point.”

Booksellers hope that the publishing industry can use the current downturn as an opportunity to publish fewer books. “They need to have some sense of what is going on in the country and what the readers are really looking for,” said Vivien Jennings, owner of Rainy Day Books, an independent bookstore in Fairway, Kan.

Of course longtime industry insiders have seen it all before. Michael Korda, former editor in chief of Simon & Schuster, who often held court from his favorite table in the Grill Room at the Four Seasons, recalled a period in the 1970s when his bosses banned editors from dining at certain restaurants. “And then after a while business got better,” Mr. Korda said. “And everybody went back to doing what they were doing before.”

A version of this article appears in print on , on page C1 of the New York edition with the headline: Puttin’ Off the Ritz: The New Austerity in Publishing. Order Reprints|Today's Paper|Subscribe